How e-invoicing will help businesses in the long run?

e-invoicing is important in helping businesses streamline their invoice processing cycles, enabling easy tracking mechanisms, and eliminating human errors.

What is e-invoicing?

An e-invoice, or electronic invoice, is a digital document that is exchanged between a supplier and buyer and validated by the government tax portal. E-invoicing is the proposed system, digitally prepared in an e-invoicing format and authenticated by the Goods and Services Tax Network (GSTN). This system ensures that a common format is followed by all businesses before reporting invoices to the GST portal.

The Need for an e-invoicing System

  1. More businesses started to show interest in improving their revenue cycles and giving best customer service, which were previously overlooked. The priority was to streamline financial processes.
  2. When invoices are digitized and transactions happen over a digital business network, businesses can focus on more strategic activities that further streamline and simplify their billing & inventory management processes.
  3. Unnecessary steps like manual data entry, accuracy checks, can be avoided through e-invoicing and the standard format for invoicing & tracking orders allows it to be managed easily.

Benefits of e-invoicing

1. Streamlined & efficient processes, saves time

With E-Invoicing businesses can receive invoices in any format from different suppliers, including image-based invoices. Electronic invoicing provides a single platform for managing all sales invoices, payments & other processes. Business users can easily access, sync, and combine information between various systems and devices, with no duplicacy of bills. E-invoicing is important in helping organizations streamline their invoice creation process, saving time by reducing human errors, inaccuracy of information, and tracking payments manually. Implementing it ultimately results in a much faster process & turnaround time. Enabling the administrator to leave behind tasks that are often repetitive and time-consuming by nature makes room for strategic tasks that add value.

2. Better Visibility and Transparency

Electronic invoicing uniquely improves visibility into invoices, purchase orders, payments, returns, orders and other contracts. It tracks invoices and provides detailed audit trails. All of the functionality is available through an end-to-end mobile e-invoicing application.

3. Increased Accuracy

You can ensure accuracy due to improved visibility and end-to-end tracking of invoices. You can also track other orders, approvals, and payment in real-time. This significantly reduces the errors and issues, ensuring no more accuracy issues. E-Invoicing is thus an important factor for enabling a closed audit trail to simplify tracking and settlement. By minimizing manual input and increasing automation, mistakes and typos are reduced. You don’t have to worry about your invoice getting lost in the mail.

4. Reduced Risk

Greater visibility into trade and transactions also means a reduced risk of invoice fraud, human error, duplication, oversight, etc. Businesses can save countless hours and resources in time taken for cross verification and due diligence when an efficient system is in place that does not leave much scope for such risks to enter the processing cycle.If you use online invoicing software, everything is saved on one platform which is accessible from anywhere on any device. Get an overview of your invoicing through automated reports and analytics. For example, the PayO invoicing software for small businesses gives you real-time insights into your finances and cash flow

From a buyer’s perspective, e-invoices reduce the risk of fraudulent bills. The authenticity of e-invoices is automatically validated.

Challenges of e-invoicing

Although there are many ways to benefit from online e-invoicing, there are also some limitations to it.

1. Internet issues

Although the move to a new system is exciting, there are some challenges. For starters, in a country like India, although internet coverage has improved significantly during the last decade, many parts of India continue to suffer from lack of infrastructure. For instance, for an MSME with a factory at a remote location grappling with poor network connectivity, e-invoicing may appear to be a compliance hassle

2. No uniform format

There are several different e-invoice formats. When sending e-invoices, the sender and receiver must use compatible file formats. Countries often have a domestically standardized format. However, especially cross-border invoicing processes can be complicated by non standardized format issues.

3. Varying legislation

Another problem for cross-border transactions is the varying legislation in different countries. But, this issue is to some extent fading out as the countries are considering joint efforts in standardizing.

4. Fees

While e-invoicing frees a lot of time to do other productive things, it might not be as completely free as sending a PDF through email. If your invoicing volumes are a bit larger, software solutions often charge per invoice sent or have a monthly usage fee. Paper invoicing is by far costlier though.

5. Some customers still prefer traditional invoices

It might not be possible to get all your stakeholders to use e-invoices. But, eventually, all businesses would consider accepting both traditional and e-invoices.

6. Change existing process

Large organizations, who have implemented auto generation of the e-waybill on creation of the tax invoice, have to change their existing process. Now they have to interface their system with the IRP portal rather than the e-waybill portal so that IRN(Invoice reference number) is issued. Also changes have to be done to their software to capture the IRN number in the database

How to register for an e-invoicing system

  1. Registering on the e-invoicing portal is a very simple process if you are a GST-registered taxpayer with a valid GSTIN number.
  2. If you have registered your business on the e-way bill (EWB) portal, then you can use the same credentials to log in to the e-invoicing portal as well.
  3. If you have not registered in the EWB portal, then you can register in the e-invoicing system directly. The taxpayer should have a GSTIN and mobile number registered in the GST portal.

Electronic invoicing is increasingly utilized across the globe every day. Services and standards are constantly developed and improved. Many of the problems are therefore likely to be resolved. Anyhow, the benefits clearly outnumber the disadvantages. Electronic, online invoicing saves time throughout the invoicing process. Start e-invoicing now!